The following shows the economic, if not practical, lunacy of our governments’ (note the plural) insisting that our Navy’s ships be built in Canada:

Shipping industry gets tariff break

Imported cargo ships, tankers and large ferries will no longer be subject to a 25 per cent tariff, Finance Minister Jim Flaherty announced Friday.

The measure is aimed at making it cheaper for Canadian shipowners to replace aging fleets with more modern and more efficient vessels.

Waiving the tariff will save the industry $25 million a year for the next 10 years, the government estimates.

“These were tariffs that don’t serve any purpose because … the ships to which they apply are not capable of being made competitively in Canada [emphasis added],” Flaherty told reporters in St. Catharines, Ont…

The tariff removal will be retroactive to the start of the year. The measure applies to all general cargo vessels, tankers, and ferries longer than 129 metres…

Surely our Navy could use a break to stretch its shipbuilding dollars further. If Canadian industry can’t competitively build civilian vessels, how can it do so at any reasonable cost for more complex naval ones? Instead this government has announced a “National Shipbuilding Procurement Strategy” under which, for vessels over 1,000 tonnes, one Canadian shipyard will be selected to build combat ships for the Navy (Arctic Offshore Patrol Ship), and one non-combat ships for the Navy (Joint Support Ship) and Coast Guard.

This is very simple, very, very old fashioned pork barrelling and vote buying. They used to set up beer stalls by the voting booths, now they are a wee tiny bit more subtle, albeit a lot more expensive.

Canadians yards can build first rate, modern, sophisticated ships, including warships – they just cannot do it without buying a whole boat load of technology and expertise, at enormous cost. But, hey, a job’s a job, right? Gotta keep those Canadian workers on the job and shopping at WalMart. Wouldn’t do to let the market decide; this is Canada!

8 Responses so far.

Just wondering how shipbuilding would be different from any other production facility?

We buy things made in China because it’s cheaper to produce it there and ship it across the pacific, than it is to produce it here, helped in large part by our self imposed environmental restrictions.

Did a trip to the Persian Gulf courtesy of the Navy in 02/03. We used local contractors, employing imported labour, for a lot of routine repair work, at least every time we were in port in a certain country, nudge nudge. The positive effect it had on the annual maintenance budget made it worth working your own crew 2/3, despite periods at sea of 30 or in some cases 40+ days, and port visits of less than 4 days.

They cancel an empty tariff and you are up in arms? Tariffs are protection for local industry, if that industry can’t fill the need with a tariff in place then why keep a tariff and punish the customers who can’t find a yard to build their ships?

Also, if the Canadian government spends billions of dollars procuring ANYTHING, including military equipment, and Canadian companies do not profit, Canadian workers lose jobs, then the media would be all over the government in question in a minute. I mean, look at the ruckus kicked up over sole sourced C-17s and C-130Js, and these purchases have economic offsets!

Military procurement costs lots of money, if the government does not make some attempt to find a way that Canadian companies and workers get some advantage in the spending of all this cash then the government will be pilloried.

No one in this conversation is looking at the economic benefits of building ships in Canada. Many excellent ships hve built in Canada in the past. For instance the BC Ferry Corpaortion had thier “Sprit” ships built in BC. Very good vessels. Looking at the financials after the build it was reported that some 80 to 85 percent of the money to build was spent in BC. That means that a large part of the money was reurned to the government in the forms of taxes from workers, taxes from the companies involved in the buildingand the suppliers of equipment.

Carrying on with the BC ferry idea. The compnay in a hurry to get new vessels went to Germany and got ‘off the rack’ designs which are not really suitable for the BC coast. One of the ships has been nicknamed the “vomit comet” becuase of its sxea keeping ability.

[...] (which any other government would follow too) practically means those ships, for cost reasons, cannot be the best: Canadian shipyards can’t competitively build large civilian vessels–but the [...]